Interpleader--taxation upon deposit to court?

[JWK]

When there's a dispute about who is the proper payee of qualified plan benefits, people often mention the idea of interpleader. My understanding, albeit limited, of interpleader is that the holder of the funds (the trust) deposits the disputed payment into the court, and the competing payees fight over who gets the money. My question is about tax consequences and reporting: is this a distribution from a qualified plan? If the funds are held by the court, aren't they no longer subject to the tax protections of the qualified plan rules? Is the distribution taxable if not rolled over within 60 days (which I assume it wouldn't be, given the amount of time necessary to resolve the interpleader action)? Who gets the 1099 (the premise of interpleader is we don't know who the proper payee is)? Maybe you can argue not taxable to the payee until the court resolves the interpleader, but how does the plan resolve the reporting issue? Does it also wait until the resolution of the interpleader? What if minimum required distributions have to be made?

[Guest]

In the situation I was involved in the Trust took the position that the interpleader payment was not a distribution to a beneficiary. The "investment" took on a different nature and the amounts were reported by the Trust when the Court resolved who the appropriate payee was.

I believe the 60 rollover period begins when in the recipients hands. On deposit with the court would not appear to count.